On the occasion of the new year, I've locked the 70-page long and VERY productive previous thread, and am starting a new one. The old thread is accessible here. For those who wish to archive the old thread locally, I recommend ArmenT's excellent BRFArchiver tool, which I used for the purpose.

Wish you all a healthy and prosperous new year, and I hope this thread continues in the same vein as the previous one. Some news to kick this off:

“The Centre gave the final clearance for handing over 2,900 acres of forest land to us for our 12-million-tonne steel project in Orissa. We are hopeful that the state government would soon transfer the entire 4,004 acres needed for the project to us,” Posco India General Manager (External Relations) Simanta Mohanty said.

Nearly 3,600 acres out of the required 4,004 acres are classified in the government category, while the rest remains under private control. “We are ready to commence work on the much-awaited project any day now,” Mohanty said, adding that the foundation stone could be laid any day.

The company does not have physical possession of the land as yet but is gearing up for the foundation stone-laying ceremony as on January 26, 2010.

South Korean President Lee Myung–Bak is scheduled to lay the foundation stone for the project.

India’s current account deficit (CAD) for the second quarter ended September 2009 was almost flat at $12.6 billion, compared to $ 12.57 billion in the same quarter in 2008, on lower net invisible surplus.

However, the deficit was two times higher than the $5.99 billion reported for April-June 2009, according to the Reserve Bank of India data on balance of payments (BoP).

While trade deficit declined from $ 39.2 billion in July-September 2008 to $32.2 billion in July-September 2009, the net invisibles surplus, reflecting activity in services and transfers, declined from $26.54 billion in the second quarter of last year to $19.57 billion in July-September 2009.

Foreign fund flows into India’s stock market rose to $17.5 billion in 2009, close to a record set two years ago, as the biggest rally in 18 years lured foreign investors.

Overseas investors sold a record $12 billion in 2008, triggering the biggest slump in Indian stocks. They bought $17.7 billion more stocks than they sold in 2007, the nation’s market regulator said.

“India has strong underlying growth, that’s not something you can say of many countries,” said Adrian Lim, a Singapore- based fund manager at Aberdeen Asset Management Asia Ltd., which manages about $25 billion in Asian assets.

Bihar is India's new miracle economy. In the five-year period between 2004-05 and 2008-09, Bihar's GDP has grown by a stunning 11.03%, way beyond the definition of 7% growth for a ``miracle economy''.......There is no official data on poverty beyond 2004-05. So, the CSO data on the economic growth of the states, highlighting the fact that five of India's most backward states have grown at a rate beyond 7%, provides pointers to some kind of poverty mitigation. Apart from Bihar, the growth rate of the other four are: Uttarakhand 9.31%, Orissa 8.74% and Jharkhand 8.45%. The all-India growth during this period was 8.49%.

well hopefully the Indo-Korean aggreement will reduce the duties on car parts and make Hyundai more attractively priced!

should light a fire under Japan to concluded their pact with us soon . 12 rounds of talks are already done. Samsung and LG killed the Japanese cos out of the consumer durable goods market . it would be unwise of Japan to let Hyundai get into even more dominant position now, with only Suzuki and its small cars as contest.

Domestic passenger vehicle sales for December 2009 grew 49 per cent to 119,930 units. This is the second highest sales notched by the auto industry in the current financial year, with November sales being the highest at 66.54 per cent.

Passenger vehicle sales have seen a double-digit growth rate since July 2009. In the last three months alone, sales grew at a far higher rate on the back of a low base in the previous year when car sales grew by just 0.13 per cent.

The country’s largest manufacturer of passenger vehicles, Maruti Suzuki, sold 84,804 units in December 2009 — 51 per cent higher than the sales posted in December 2008. Domestic sales last month stood at 71,000 units, which is a rise of 36.5 per cent against the same month in 2008.

“With a production of 46.77 million tonne (mt) crude steel during the January-October 2009 period, the country has emerged as the fourth largest steel producer in the world and is expected to become the second largest producer by 2015,” the steel ministry said in a statement today.

The country was likely to achieve a crude steel production capacity of 124 mt by 2012, it said. The ministry also said as many as 222 memoranda of understanding had been signed with various states, mostly Jharkhand, Chhattisgarh, Orissa and West Bengal.

These projects would create an additional capacity of 276 mt.

“In the next five years, demand will grow at a higher annual average rate of over 10 per cent compared to around seven per cent growth achieved between 1991-92 and 2005-06,” the statement said.

I did some Economics in undergrad saar and am trying to do some more in me applied phinance degree now...I have learnt a lot more though from reading externally than through academia....I found that as long as you have your basic principles of economics clear the rest can be added ad-hoc as and when you want...will definitely try and put my 2 cents in...

Suraj, if you know of any good online resources or suggested reading for basic economic theory could you add them to the first post or may be share them in one of the other threads? I'm trying to find things on my own but if there are some recommended reading, i'd appreciate it. Thanks.

The Thirteenth Finance Commission chaired by Vijay Kelkar has recommended a higher devolution or a larger share of Centre’s gross tax receipts for states, separate grant from the Consolidated Fund of India for states that increase their forest cover, more resources for urban local bodies, a new five-year fiscal prudence strategy, and a complete stop to ‘below-the-line’ budgeting.

According to government officials, the Commission, which submitted its report to President Pratibha Patil on December 30, has recommended that states should get around a percentage point higher share of the Centre’s gross tax receipts for the next five years beginning April 1, 2010. ......But, even as it does so, Kelkar has suggested that the government put a stop to ‘below the line’ budgeting. Significant liabilities on account of oil, food and fertiliser bonds are currently below the line, and fiscal and revenue deficits are understated to that extent. Kelkar has said the government must provide for these liabilities in the expenditure Budget itself as cash, instead of issuing bonds that only postpone the burden to the next generation.

Two key functionaries in the government expect no monetary tightening measures soon, despite the rising food inflation. Instead, they see food prices cooling by the next month.

Kaushik Basu, chief economic advisor in the Ministry of Finance, today said there was no need to take steps which could have implications for growth and employment. “Right now, there are no expectations of monetary tightening, nor do I believe there is a reason for it,” Basu said at a Ficci event. He added that food inflation would peter out in few months.

Planning Commission Deputy Chairman Montek Singh Ahluwalia, too, said food prices were expected to moderate by the next month, as the current price rise was not due to excess liquidity in the economy. Food inflation reached an 11-year high of 19.95 per cent in the second week of December.

Commenting on the country’s gross domestic product, Basu further said, “India might grow slightly above 7.5 per cent in the current year (fiscal), and achieve 9 per cent growth in 2010-11…If India’s growth crosses that of China in 4-4 years, it should not be a surprise.”

India’s manufacturing output rose the most in seven months in December as exports rebounded and government stimulus stoked domestic demand for consumer goods.

HSBC Holdings Plc and Markit Economics’ Purchasing Managers’ Index stood at 55.6 last month compared with 53 in November, according to a report released today. That was the ninth monthly reading above 50, which indicates a gain in factory production.

The mineral production in October last year was higher by 8.25 per cent compared to September 2009, while the increase was 8.25 per cent compared to October 2008, the Mines Ministry said in a statement.

"The total value of mineral production (excluding atomic and minor minerals) in the country during October 2009 was Rs 8,817 crore," it added.

The coal sector's contribution remained the highest at Rs 3,379 crore (38 per cent) followed by iron at Rs 1,650 crore and petroleum (crude) at Rs 1,590 crore, the statement said.

Natural gas contributed Rs 1,237 crore to the government kitty, while the share of lignite and limestone stood at Rs 215 crore and Rs 233 crore respectively.

In terms of quantity, October 2009 saw production of 425 lakh tonnes and 26 lakh tonnes of coal and lignite, 3,976 million cubic metres natural gas, 29 lakh tonnes petroleum (crude) and 160 lakh tonnes of iron ore among other minerals.

Hmm in the current environment with the problem facing with monsoon rains and all affecting the agri production I really wonder if the concept of desalination plants would work in India...I mean they can be used primarily for agricultural purposes and would most definitely ease the dependency on having a good monsoon.

Here in Oz they are currently building a few desalination plants that will supply houses with water...

andyB: such an option has several issues associated with it:* Is the irrigation problem one of presence of brackish/seawater instead of fresh, or no water at all ?* Wouldn't such an option only be feasible in coastal areas ?* What is the setup cost of such a plant, and what are operational costs ?* What are operational issues, e.g. electricity supply requirements, keeping in mind the state of our grid ?

A detailed breakdown for defence budget of 2009-10 will be made available only after the release of a parliamentary defence committee report that reviews the grant of demands for defence ministry for 2010-11. But when the finance minister presents his next union budget to the parliament in March this year, watch out for the RE figure for capital expenditure on defence for 2009-10 [Demand number 27 of the Finance bill]. If that figure be X crore, then (54824 — X) crore will be the amount returned from the allocation of 19118.74 crore for new schemes in 2009-10. Let us see whether the figure will be less than 38 percent this year or more.

India is the second largest two-wheeler market in the worldFourth largest commercial vehicle market in the world(news to me!!)11th largest passenger car market in the worldExpected to be the seventh largest by 2016

dear rakshaks,the task force on goods and service tax (13 th Finance Commission, GOI) has come out with a report on 15/12/2009.it is a bulky pdf file (about 170 pages). i am not sure if linking it here is appropriate.i can e mail it to anybody who would like to go through it.cheers

wig: Is it available off the Finance Commission's website, or that of any other organization you are affiliated with ? If so, just post the URL here for us to access the document from.

Sriman: sorry for the delay in responding. I would not place a massive premium on book learning. Not only can you learn much starting even from basic online resources like wikipedia, but some of the most valuable discussions here come about from people making common sense insights, combined with general familiarity with the economic scene on the ground in India.

Useful discussions come about when people bring up a topic of interest, and have the enthusiasm to debate its pros and cons, rather than just ask a question wishing to be spoonfed an answer by 'gurus'. Such topics don't always have to be valid ones - I've on multiple occasions raised ideas that turned out in retrospect to be bad. Ask vina about his broadside against me a few years ago for suggesting India start a sovereign wealth fund

A healthy increase in corporate tax receipts pushed direct tax collections in December 2009 to Rs 66,410 crore, up 24.48 per cent from Rs 53,347 crore collected in the month a year ago.

Corporate tax receipts recorded 44 per cent growth to Rs 53,293 crore, compared with Rs 37,002 crore in December 2008. However, personal income tax collections fell by 20 per cent to Rs 13,117 crore, against Rs 16,345 crore in December 2008.

The fall in personal income-tax collections was largely on account of higher refunds at Rs 8,954 crore, against Rs 5,979 crore, a growth rate of 49.76 per cent compared to the same period in 2008-09, the Central Board of Direct Taxes said in a statement.

Direct tax collections in the first nine months (April to December) of this financial year rose 8.51 per cent to Rs 2,50,232 crore, compared with Rs 2,30,598 crore collected in the same period in 2008-09. The growth was driven by increasing corporate tax collections, whereas personal income-tax receipts showed a decline.

It was quoted from some Canadian source. It's just a placeholder because they don't know the actual value (supposedly somewhere around 7% but no one really knows because employment is mostly informal in India).

IT Adviser to the Prime Minister Sam Pitroda is understood to have suggested immediate disinvesment of 10 per cent government equity in BSNL, a proposal that is expected to be conceded at the top-most level of the government soon. The management of BSNL had so far not been able to proceed with the divestment process, due to opposition from the PSU unions.

Concerned over BSNL’s falling revenues, the PMO had asked the company top brass and A Raja to look into causes and find ways to improve the performance. The PSU had reported the lowest net profit among the telcos of a paltry Rs 575 crore on a revenue of about Rs 36,000 crore last financial year.

Agriculturists, including farmer leader Sharad Joshi and Consortium of Indian Farmers Association (CIFA) Secretary-General Chengal Reddy and International Food Policy Research Institute Director (Asia) Ashok Gulati asked the minister to review the working of the farm debt waiver scheme and rationalise fertiliser subsidy. “The country has double the stock it can store.:eek: We need to double our storage capacity in public-private partnership. Ask private sector to build all these storage capacities,” Gulati told reporters after the pre-Budget meeting.

Gulati told reporters he had asked for incentivising direct buying by retailers or cooperatives from farmers, so that the value chain could be compressed. “You will be able to give benefit to consumers as well as farmers only when the value chain is compressed. At present, farmers do not get a third of what consumers pay,” he said. The rate of food inflation was ruling at 19.83 per cent for the week ended December 12, after touching an 11-year high of 19.95 per cent the previous week.

There seem to be no signs of organised retail blunting food inflation. Prices at organised retail outlets for key commodities, like onions and potatoes, are higher than at the neighbourhood store.

This belies the original promise of the “farm-to-fork” model, which envisaged a higher price for the farmer and a lower price for the consumer on the back of efficient supply chains.

The higher prices could be due to a deliberate premium pricing strategy, or the impact of high overhead costs or lack of an efficient supply chain, or a combination of all three, say retail industry analysts and executives.

For starters, there are not many food retailers who are sourcing directly from farmers. Some who tried sourcing produce from farmers directly could not sustain it, due to regulatory and viability issues. Now, most retailers buy from the Agricultural Produce Marketing Committees or APMC yards, where various commodities are auctioned.

“Their (retail chains) supply chain and retailing overheads are very high, and consumer reach and customer base is low. Hence, costs along the supply chain are very high. They are finding it very hard to compete with unorganised retail, who are highly efficient, and low cost,” explains Vikram Puri, chief executive officer of Mahindra ShubhLabh Services Ltd (MSSL), the agri business division of Mahindra Group that supplies fruit to international and domestic retailers.

“There are other challenges in setting up an efficient supply chain. Volumes are insufficient to justify large investments in cold chain infrastructure and transportation,” says Naimish Dave, director of OC&C Strategy Consultants.

Future Group has, therefore, outsourced sourcing and retailing of fruit and vegetables at its Food Bazaar and Big Bazaar stores to third-party vendors due to viability issues.

“Nobody makes money in fruit and vegetables. They have to keep it just to drive footfalls. Sourcing and selling onions and potatoes is a very complicated and specialised business. It requires both financial investment and managerial attention. They thought it is better to focus on other areas than losing money,” says a former Future Group executive who did not wish to be named.

It boggles my mind that volumes in essentials like fruits and vegetables, in a large, densely populated country like India, are insufficient to justify investments in a more efficient supply chain. It's more likely that government meddling has destroyed any incentive to invest in such supply chains.

Some microeconomic data to complement the macroeconomic data above: one apple costs Rs.25 at my neighbourhood grocery store - probably more than it would cost at a US supermarket. Given that Himachal Pradesh is a large domestic producer of apples, it's hard for me to understand why this should be.

^^ I don't know about other food items, but Apple is in shortage because of change in weather patterns. Last year was a blow for apple farmers. Though this is off-topic, but worth to be brought to notice that due to abnormal weather conditions and the patterns thus followed will bring havoc on Himachal's economy. Himachal's economy is Apple. But due to over-farming, people are cutting down every piece of jungle left. 2 decades ago Kullu was a big producer of apples. Today there is only 1 apple tree left in Kullu, and that too without fruit. Right altitude is going higher and higher. And there is a limit where farmer can reach. Maybe its same with other crops as well, including low productivity due to age-old farming-practices.

Steel magnate L N Mittal is today believed to have proposed setting up a Rs 30,000 crore integrated steel plant in Karnataka when he called on the southern state's Chief Minister B S Yeddyyurappa.

Mittal, who leads the world's largest steel maker ArcelorMittal, has shortlisted different sites near the iron ore rich-belt of the state for the estimated six million tonne per annum plant, a Karnataka government official said here.

The project would also include a 750 MW captive power generation plant. Iron ore mines are located at Bagalkot, Bijapur, Bellary and Kopal.

The government is likely to miss the April 1 deadline to introduce the Goods and Services Tax (GST), and a decision on a fresh date is expected tomorrow.

"Tomorrow we will discuss the new date for introduction and compensation formula to the states with the Union Finance Minister," Empowered Committee of State Finance Ministers chairman Asim Dasgupta said here today.

The government had proposed to introduce GST, which will do away with most of the indirect taxes at the Centre and the states, from April 1, 2010, but this date is set to be missed, as so far no consensus has been arrived at on the modalities of revenue sharing among the Centre and the states as well as on the date of its nationwide roll-out.

As such, a very high percentage of gross fresh and dry farm produce, approx. 30 percent, is wasted before it reaches the end consumer due to supply chain inefficiencies related to poor handling, high transportation costs and lack of cold chain facilities. To start with, reduction of supply chain inefficiencies itself can have a positive impact in increasing the net output available for sale by offsetting the supply shortage instead of exacerbating it.

Perhaps the most important factor in food price inflation has been the government overregulation in marketing agricultural products, which distorts the free market mechanism of price discovery. The mandatory marketing of agri-produce only through marketing committee as per APMC act, in some form or other, in the states prohibits direct marketing to private entities for purpose of reselling. This arbitrarily increases the number of intermediaries and their commissions, the end result being high prices paid by retail consumer due to unusually high mark-up over the measly price paid to the farmer.

By Brooke Masters, James Fontanella-Khan and Justin BaerPublished: October 22 2009 20:29 | Last updated: October 22 2009 20:29

When federal officers arrived at the home of Anil Kumar, a McKinsey partner, to arrest him on charges of conspiracy and securities fraud, he fainted and had to be briefly hospitalised.

That left his fellow partners at the elite consulting firm completely in the dark for several critical hours about the actual charges he was facing.

Denying all charges against him: McKinsey partner Anil Kumar, 51, is escorted by an FBI agent in New York, where he was accused of crimes including securities fraud

Initially, they did not know whether he had a problem with “security” or, as turned out to be the case, “securities,” Dominic Barton, McKinsey’s worldwide managing director, told the Financial Times.

When US prosecutors released the court documents, McKinsey learned that Mr Kumar was accused of passing inside information to Raj Rajaratnam about a planned Middle Eastern investor in Advanced Micro Devices, a McKinsey client.

Mr Kumar, 51, said he was shocked by the complaint and emphatically denied all charges. US court documents claim he was a direct or indirect investor in Mr Rajaratnam’s Galleon hedge funds. Mr Rajaratnam’s lawyer has said his client is innocent.

The news of his arrest stunned both McKinsey and the broader management consulting industry, which is valued above all in executive suites throughout the world for discreet counsel on matters often central to corporate strategy.

Unlike law firms and investment banks, top consulting firms have not previously been hit by investment trading scandals.

While McKinsey has always required employees to keep client matters confidential, for the past three years partners have been required to sign something annually acknowledging the rules.

“This issue is completely virgin territory for us. We have very clear policies that you do not invest in clients or situations even where it is legal,” said Mr Barton, who spent much of last weekend talking to dozens of clients and to a special firm committee that handles emergency situations.

The firm has put Mr Kumar on leave and asked an outside law firm to do an investigation, he said.

At McKinsey and in Mr Kumar’s Silicon Valley community, friends called him a careful, bright man who valued his family and his network of connections

“This is a shock – Anil is extremely discreet, he never talks about work,” said Venktesh Shukla, a family friend and chief executive of Nusym, a Silicon Valley start-up that does verification technology.

Born in India, Mr Kumar was the man sent by McKinsey to set up its India Knowledge Centre in New Delhi in 1998, which produces data Wall Street uses to take crucial decisions.

He maintained a close relationship with Rajat Gupta, who headed McKinsey from 1994 to 2003. They worked together to found the Indian School of Business, the country’s top-ranked school according to the Financial Times.

“Mr Kumar had been involved from the start of the school and was a very active and supportive member of the board,” said Ajit Ranjnekar, dean of the ISB. Mr Kumar has taken a leave of absence pending the case.

Vish Mishtra, a Silicon Valley venture capitalist and head of TiE, a networking group for the Valley’s large Indian community said Mr Kumar “was very close to [Mr] Gupta, they were hand in glove”.

After Mr Kumar returned to California, the powerful Confederation of Indian Industries, a business lobby, asked him to co-chair the Indian American Council, formed to draw business and philanthropic ties between the US and India.

However, as much as Mr Kumar was admired for his business ability and sharpness, he also drew fire for what was seen as his arrogance, according to many people who worked closely with him during his days in India.

“He had that ‘I know it all’ kind of attitude,” said one IT executive. “He always wanted things his way and the fact he had worked in the US made him think he didn’t need advice from Indian executives.”

Additional reporting by James Fontanella-Khan in Mumbai and Richard Waters in San Francisco

Companies with distribution or manufacturing units located across the country to take advantage of the differential tax rates may have to close down some of their subsidiaries and alter business models to minimise initial impact on profitability under the proposed Goods and Services Act.

Most companies—mainly those in the fast moving consumer goods category and in traditional manufacturing sectors—had developed a model of countrywide distribution point system to gain on the different rates prevalent till now. However, with the eventual GST rollout where a uniform tax rate will be levied on both goods and services, such companies will lose out on the advantages of a dispersed presence and might also see an impact on their profitability, say people tracking the implementation of the new tax.

The government has proposed the GST in a bid to simplify indirect tax procedures, broaden the tax base by clubbing services into this uniform tax, and to also minimise the various exemptions earlier being claimed by companies. Firms typically had to work through a maze of multi-level taxes, including central excise, customs countervailing duty, special additional duty, state-level value added tax, central sales tax and service tax. Also, under current tax norms, some states have a zero VAT, while others have differing tax slabs.

"Firms operating in a zero duty (0% VAT) state will be hit if GST brings with it a new tax levy, which will affect sales of existing inventory," {This can drive up cost of most of auto companies and NANO}said Suresh Surana, chairman of Mumbai-based professional services firm RSM Astute, that is currently advising clients on measures to gear up for the eventual GST rollout. "GST being a major indirect reform, it will have a significant impact on cash flow, working capital and on profitability."

Automobile sales for December 2009 stood at 1,000,500 units, an increase of 67.5 per cent against the low base of 597,622 units in December 2008. This growth is the highest so far in 2009–10. The second highest growth of 46 per cent was witnessed in November.

“A combination of factors like the three fiscal stimulus packages, low interest rates on vehicle financing made possible by PSU banks, cash infusion from the sixth pay commission and new models from manufacturers have helped December sales to rise,” says Pawan Goenka, President of the Society of Indian Automobile Manufacturers and President of Mahindra & Mahindra. He was addressing the media today at the ongoing Auto Expo 2010.

The 68 per cent rise in December 2009 sales was made possible by the sustained growth in cars and utility vehicles (50 per cent), continued growth in medium & heavy commercial vehicles on a low base last year (248 per cent), and in two-wheeler sales (67 per cent) last month.

The Centre today proposed to compensate the states with 50 per cent of the total revenue loss of Rs 9,000 crore this year due to reduction in the Central Sales Tax (CST).

Finance Minister Pranab Mukherjee asked the Empowered Committee of State Finance Ministers to work out a package where the states have to share 50 per cent of the CST losses in the current financial year.

“We will have to discuss this proposal with the state finance ministers. He (Pranab Mukherjee) has asked us to come back with the new package. It would be about Rs 14,000 crore,” West Bengal Finance Minister and chairman of the state finance ministers’ body, Asim Dasgupta, told reporters after a meeting with Mukherjee.

Before introducing the Goods and Services Tax (GST), states want the central government to completely phase out CST and adequately compensate them for the loss in revenue.

State Bank of India (SBI), the country’s largest lender, is scaling down its loan growth estimate for the current financial year by at least 700 basis points to 18 per cent in the wake of lower demand for loans.

At the beginning of the financial year, the bank had expected to expand its loan book by over 25 per cent. However, due to a decline in demand for loans, the growth rate till December-end dropped to around 16 per cent.

SBI Chairman O P Bhatt told reporters at a press conference that during the year ending March, the growth rate would be around 18 per cent.

Despite the slowdown in loan growth, SBI is growing faster than the industry. According to the latest RBI data, overall credit growth for the 12 months ended December 18 was 11.25 per cent.

Bhatt said companies were still slow to avail already sanctioned credit. With projects on hold in the wake of the slowdown, the gap between sanctions and disbursals was close to Rs 50,000 crore, he said.

“Credit growth is tentative. We do not know if the demand is due to the stimulus or due to the Sixth Pay Commission. It is early to say if the demand is going to pick up,” he said.

Interesting that both the auto sales and credit growth articles refer to the 6th pay commission. The disbursals clearly appear to have gone into personal consumption spending, increasing economic activity, but lowering the need for credit.

Private sector engineering major Larsen & Toubro has said that China is systematically killing Indian manufacturing sector and sought 25 per cent anti-dumping duty on Chinese goods.

"China has a fixed currency. It is not a market economy like ours. China is systematically killing the Indian manufacturing sector," Naik, who was here for foundation stone laying ceremony of a forgings unit at Hazira told reporters here yesterday.

The private life insurance industry in India recorded losses of Rs 4,879 crore in 2008-09, an increase of 43% over Rs 3,413 crore recorded in the previous year. To make up for this record loss, promoters of life insurance companies had pumped in Rs 5,956 crore in 2008-09, which is equivalent to the amount invested by the promoters of life companies in the preceding 10 years.

Following the losses reported in 2008-09, accumulated losses of the life insurance industry have risen to Rs 8,585 crore. In its annual report released this week, the Insurance Regulatory and Development Authority (Irda) said the outlook for the insurance industry was uncertain due to many challenges. The regulator added that reduced demand, low interest rates and the need for additional capital by many companies are some of the major challenges facing the insurance industry in the current fiscal.

"Inflation will continue to be a serious issue," says Rajesh Chakrabarti, assistant professor of finance at the Hyderabad-based Indian School of Business (ISB). "The stimulus is doubtless fuelling it in part, and there is no way of rolling it back. So monetary measures will have to counteract it, but there is very little maneuvering room. Inflation is likely to stay at present levels or worse for much of next year."

Chakrabarti of ISB believes interest rates have to rise, "but the government and RBI may be nervous about killing a fragile recovery." The State Bank of India, meanwhile, says that it doesn't see any chance of rate hikes in the next six months. On the other hand, the public sector Union Bank of India has raised some deposit rates beginning Jan. 1. It has introduced a 555-day maturity scheme at 6.75% against 6% earlier.

GDP GrowthBecause of these imponderables, estimates of GDP growth vary widely. In the April-September quarter, GDP rose a surprising 7.9%. Prime Minister Manmohan Singh says he sees a return to the days of 9%-plus growth next year (2010-2011). The government's own estimate for 2009-10 is 7%-8%. Given current trends, it may end up on the high side of that range.

"I expect GDP growth to be around 7.5% in 2010," says Bhandare of TSMG. "There is still some degree of uncertainty about the global recovery--production and private consumption have not picked up, and unemployment is still high. A good global economic recovery will be an additional bonus for the Indian economy. If that happens, we could even see 8% GDP growth." Adds Chakrabarti of ISB: "It should pick up a bit, but is unlikely to be too much higher. I would say 7% to 8%, or more likely 7.5%." Madhabi Puri Buch, managing director and CEO of ICICI Securities, also sees a 9% figure as overarching. "Our economy is expected to grow at least 7.5%-8% for many years," she says. Parekh of E&Y is among the optimists, noting that "8%-9% seems possible." In contrast, the IMF has projected 6.4% growth in 2010.

"We have registered exports of $14.6 billion in December, which is a growth of 9.4 per cent over November. Sectors which have contributed to the growth are pharma, engineering, automotive compo nets and chemicals," Sharma told reporters at Bancon conference here.

Although the country's exports have moved to a positive terrain in the past two months, the economy is yet to recover from the losses resulted from 13-months of continuous fall in exports, Sharma said, adding that export-growth is expected to maintain momentum moving ahead.

With a view to simplify foreign direct investment (FDI) process, the government plans to introduce a single FDI document by end-fiscal and is currently discussing the various modalities, Commerce and Industry Minister Anand Sharma said today.

This would make the entire process for foreign direct investment more investor friendly. The new format will subsume all 177 press notes. Presently, the document is under the discussion among all stakeholders, which is expected to close by this month-end, he said.

The new policy will come in the form of a single consolidated press note, which will not only specify the sectoral caps, but also the way foreign investments will be treated.

Commodity exchanges in the country closed the year 2009 with record turnover of Rs 70,90,442 crore, up by 40.85 per cent from Rs 50,33,872 crore in the previous year.

Higher turnover was despite ban on few farm commodities such as rice, urad, tur and sugar and delay in passing of the Forward Contracts (Regulation) Amendment (FCRA) Bill, which will not only allow options and indices but also put FMC at par with stock market regulator Sebi.

The data, compiled by commodity market regulator FMC, showed that leading commodity exchange MCX clocked the highest business of Rs 59,56,644 crore among 24 commodity exchanges in 2009.

MCX, where bullion and energy are largely traded, was able to make 39 per cent jump in its turnover amid high volatility in gold and silver prices during last year.

The turnover of leading agri-commodity bourse NCDEX surged by over 28 per cent to Rs 8,05,707 crore in 2009 following the re-launch of suspended commodities like chana, soya oil, potato and rubber during 2008-end.

Industrial growth has gathered pace as factory production rose by 11.7 per cent in November 2009, fuelled by stimulus-backed demand for manufactured goods, particularly consumer goods.

Manufactured goods, which have around 80 per cent weight in the Index of Industrial Production, which measures industrial growth, grew by 12.7 per cent in November 2009 compared to 2.7 per cent in the same month a year ago.

Within this category, consumer durable goods production expanded by 37.3 per cent in the month against just 0.3 per cent a year ago.

Industrial output in the first quarter of 2009-10 stood at 3.8 per cent and in the second quarter at 9.2 per cent.

With better-than-expected performance in November, industrial production in the first two months of the third quarter now expanded at more than 10 per cent, as it grew by 10.3 per cent in October.

there was a intview on food prices with M S Swaminathan today. he said there is no chance of a 'second green revolution' the media keeps harping about because in his words 'a revolution needs a mass of revolutionaries' and 70% of the young in rural areas no longer want to take up farming. also due to various reasons farming is a fairly risky activity compared to say driving a taxi or shopkeeping. arable land is being lost to urban expansion.

as per him, due to steep price rise in protein sources like dal , around bottom 25% of population are goingmalnourished as they cannot afford to buy anything beyond the basics like rice, wheat, oil.

the same TV program displayed a price chart saying indian families spend 43% of income on food alone. the rest like edu, health, durables were in single digits.

With delays in award of government projects and no capital expansion in the manufacturing sector, India Inc’s order inflows during the quarter ended December 2009 declined by 42 per cent over the sequential quarter and by a marginal 1.5 per cent year on year.

Order inflows in the fourth quarter have been mainly for companies reliant on the power sector. Those dependent on capital expansion projects witnessed poor orders. Data compiled by the Business Standard Research Bureau from announcements made to the stock exchanges show that orders are raining in for power. Close to 45 per cent of the total order flow of Rs 43,220 crore have gone to build up 7,850 Mw of power plant, while orders worth Rs 4,700 crore have been received by power equipment and power solution companies.

After the power sector, a majority of the orders have gone from from the engineering and construction sector for water projects and building of roads (Rs 13,760 crore), oil and gas (Rs 1,333 crore), pipes (Rs 1,100 crore) and metal (Rs 863 crore) sectors. The remaining Rs 2,291 crore of orders received from other sectors include telecom and pharma.

The capital goods industry is yet to see any considerable increase in order flows from other segments, as revival of the industrial capex cycle seems to be some time away, says an analyst at Mumbai-based Centrum Broking. While there has been a pick up in the replacement demand for power equipment, there is yet to be any big increase in orders from capital intensive projects.

The power sector is one of the biggest growth sectors in India with the Government of India has set a capacity addition target of 78,000 MW by 2012. Four newly listed power companies – Adani Power, NHPC, Indiabulls Power and JSW Energy, are planning to spend around Rs 59,000 crore for the construction and development of new power projects. Jindal Power and Sterlite Energy are planning to raise funds for expansion of power capacity.

Bharat Heavy Electricals Ltd (BHEL) has received orders worth Rs 11,398 crore in the fourth quarter, of which Rs 11,200 crore of orders are for building up 4,650 Mw of power plants. Larsen and Toubro has received orders worth Rs 12,436 crore, of which Rs 8,532 crore is to build 3,200 Mw of power plants. ABB (Rs 506 crore) and KEC International (Rs 246 crore) bagged orders to provide power solutions and construction of sub-stations.

This is both good and bad news. The bad part is the project delays affecting order flow, which in turn affects future manufacturers' capacity expansion plans. The good news is that most suppliers in the heavy engineering sectors, particularly BHEL and L&T, have massive order backlogs as it is. Turning to foreign - particularly Chinese - suppliers, has been politically sensitive. This is a situation where manufacturers increasing their supply will create their own demand.